Latin American e-commerce will have an average annual growth of 19% until 2025. According to The Global Payments Report 2022, by Worldpay of FIS, Argentina will have a compound annual growth rate (CAGR) of 26% during this period. On the other hand, the two largest markets in the region, Brazil and Mexico, will reach 18% and 17%, respectively. The expansion is based on a wide range of payment methods that are increasingly diversified every year. This is one of the scenarios presented by the study — which is in its seventh edition and provides a real picture of online and physical payment methods in 41 countries. In Latin America, the survey covered six countries, including Brazil.
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Traditional forms of payment, such as credit cards and cash, are still widely used. However, research shows that they continue to gradually lose participation in e-commerce. In 2021, credit cards, for example, represented 39.3% of transaction value and stood out as the sector’s largest presence across all Latin American markets. Brazil, by the way, was the country where the highest consumer commitment to its use was recorded with 44.7%. Last year, however, debit cards accounted for an additional 18.2% of the value of transactions in the region.
The rise of digital wallets in Latin America
Peru and Chile, where their populations with bank accounts are growing, will contribute to projected card adoption rates by 2025. Even with a 3% decline in share, credit cards will remain the leader in e-commerce payments in Latin American markets in the coming years, except Mexico. In this country, the growing popularity of digital wallets should take the lead. By 2024, it will be the main payment method in e-commerce by share of transaction value.
Cash payment transactions are predicted to halve by 2025 with 3.8% of e-commerce spending in the region in 2021. As for Brazil, this payment method (which represented the majority of point-of-sale payments until 2018) fell below a third of the value of payments in 2021. The method is now forecast to drop below 25% by 2024.
There are several reasons why consumers are migrating from cash and credit cards to digital wallets and BNPL (Buy Now, Pay Later). Factors contributing to the decline in the share of credit cards, for example, include:
- increase in alternative payment methods;
- mass migration to digital wallets linked to credit and debit;
- consumers who opt for an interest-free loan in the form of BNPL;
- credit-centric vertical markets.
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Digital wallets accounted for 19.2% of Latin American e-commerce spending in 2021. The projection is to increase to 25% of transaction value by 2025. Mexicans were the most transacted via digital wallets in the region, representing about 27% of transaction value in 2021 , and the perspective is that it will approach the share of 36% by 2025.
Increase in Pix transmissions in Brazil
Bank transfers accounted for 9.7% of regional e-commerce spending in 2021, with a similar projection (9.4%) by 2025. However, their use is taking different paths. In Peru, it is estimated to decrease from 8.8% in 2021 to 3.8% in 2025, and in Colombia from 16.5% to less than 10% in the same periods. In Brazil, with the introduction of the Pix instant payment system, bank transfers are expected to increase from 10.9% to almost 18% in 2025.
BNPL Options is starting to gain traction in Latin American e-commerce. Transaction values remain low — below 1% — but growth rates will be among the fastest in the world. A 98% increase is estimated from 2021 to 2025, when the method will account for approximately 2.2% of Latin American e-commerce transaction value.
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